December wheat was able to hold onto one of the better gains in weeks, but was still unable to finish above key resistance. Regardless, we are beginning to make a little headway to the upside, as it appears we are in the process of trying to carve out, but that can take months to form before we actually see a rally of any significance.
Most of the chatter in this market continues to surround the issues with poor quality wheat in Europe, and had it not been for the better than expected production in Russia, could have been a positive for US wheat. While it ultimately still could be, the demand is by no means immediate as evidenced by the lackluster export trade.
Inspections for last week were the lowest in a month at 12.9 million bushels and right at the low end of expectations. This is the time of year when we should be looking at solid numbers and this figure was over 4 million below the 10-week average. For the marketing year to date we have moved 146.82 million bushels, 32% below the same period last year and as it stands, we will need to boost the average weekly tally to 17.5 million to reach the USDA target of 900 million.
The winter wheat harvest has reached 90% complete which compares with 83% a year ago and 85% on average. Spring wheat headed sits right on the average at 97% and conditions were unchanged at 70% good/excellent.
Even though we could not close above resistance yesterday, the overall action in wheat is encouraging. If we did close above the 5.65 level in December futures it could lead to a quick push to 5.85 but I would not be shocked to see a couple more weeks of sideways choppy action between 5.85 and 5.45. Eventually I believe we will expand the upper end to 5.95 and possibly even 6.25 but that should take some time.
The corn market found additional strength as the day wore on yesterday supported by the rally in beans and a little concern about the warm temps to the south and the uncertainly of moisture in the days ahead. Another few showers would be beneficial to finish out this crop but the big question would appear at this point to be how large is large? The latest estimate comes from FC Stone and has basically fallen in line with the other recent releases at 172.4 b/p/a with a total production of 14.455 billion. Informa will release their number later today.
Crop conditions did see a slip of 2% in the good/excellent category to 73%. While part of this could be related to the drier than desired conditions to the western side of the Corn Belt, this is also a seasonal pattern and we should see the conditions inch lower now through harvest. Corn silking now stands at 90% vs. the normal 88% and in the dough stage 36% compared with a normal 29%.
We did post the strongest export inspection in a month as we shipped 44.9 million bushels. The 10-week average has been 40.4 million and the 4-week average 39.05. Unfortunately this could be too little too late as this brings the year to date tally up to 1.691 billion and to reach the projection of 1.9 billion in the next 4 weeks we would need to step the weekly shipments up to 52.1 million.
The overnight weather runs do provide potential for moisture across a good swath of the Midwest including some of the recent dry areas and prices have eased a bit overnight. Information is sketchy so far but harvest is kicking into gear in the Deep South so we should have good updates within the week. Outside of that, I suspect that corn should remain in a sideways pattern through the reports on the 12th with action to the upside pretty limited.
As should be obvious, beans are the crop with the most at risk with growing conditions at this point and in turn should be the most volatile and unsettled. After clicking into a slightly lower low for the move in the Sunday overnight trade went on to post an outside higher reversal on Monday keeping the hope of the bulls alive.
Other than the short-term oversold technical position, the biggest stimulus was weather concerns as there remain points to the west and south that could use moisture and have been experiencing warm conditions. The overnight forecasts seem to have alleviated some of these fears and the condition reports reflected nothing as of yet either. There was no change in any of the condition categories with the good/excellent brackets at 71%. Many thought we could see a 1 to 2% slip in the rankings. Beans blooming remain just ahead of average at 85% and the number setting pods reached 57% versus the normal 48%.
Export inspection did not provide any assistance for the bulls as we shipped just 1.4 million bushels this past week. The year to date total now stands at 1.582 billion and while nothing to sneeze at, it would appear that we will fall short of the current target of 1.62 billion as to reach that number we would need to average 9.4 million per week for the next 4 weeks.
As I commented yesterday, the bean market is trapped in a trading range with November futures swinging between 11.15 or so to the upper end and 10.55/65 on the lower and coming into this week short-term oversold, we appeared poised for a rebound. We have unwound some of Monday’s gains overnight night but I suspect we should have room to regroup and make a run for the upper end between now and the 12th.